LONDON - European stock markets and the euro sank on profit-taking as investors took their leads from company updates and economic data, while the crisis in Ukraine continued to cloud sentiment.

London's FTSE 100 lost 0.36 per cent to close at 6,814.57 points, while Germany's DAX 30 slid 0.27 per cent to 9,581.45 points and the CAC 40 in Paris dropped 0.66 per cent to 4,477.28 points.

Madrid gave up 0.98 per cent and Milan tumbled 1.6 per cent.

Nearly two dozen people died in fierce fighting between Ukrainian troops and pro-Russian rebels in the southeastern city of Mariupol, two days before separatists plan to go ahead with a referendum.

European Central Bank president Mario Draghi strongly suggested the bank could ease monetary conditions in the euro area next month, saying the "governing council is comfortable with acting next time".

The euro dropped to $US1.3765 from $US1.3840 late in New York on Thursday.

HONG KONG - Asian stocks were mixed after weak Chinese inflation data raised concerns about the risk of deflation in the world's second-largest economy but also opened the door to possible stimulus measures from Beijing.

Tokyo closed up 0.59 per cent, or 35.81 points to 14,199.59, as bargain-hunting reversed opening losses triggered by a strong yen.

Sydney slipped 0.29 per cent, or 16.0 points, to end at 5,460.8, while bargain-hunting saw Seoul close up 0.31 per cent, 5.95 points, at 1,956.55.

Hong Kong rose 0.12 per cent, or 25.87 points, to 21,862.99 while Shanghai slipped 0.20 per cent, or 4.13 points, to 2,011.14.

Chinese annual inflation fell sharply to 1.8 per cent in April, the lowest reading since October 2012 and well below the 3.5 per cent annual target set by Beijing.